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Whitepaper
Open-Source Strategies
for Companies –
Insights and Guidance
Authors
Carina Culotta (Fraunhofer IML)
Estelle Duparc (TU Dortmund)
Project Team DB Schenker
Simjees Abraham
Maik Schmidt
Tilo Wiedera
Project Team Fraunhofer IML
Carina Culotta
Simon Lechtenberg
Project Team Fraunhofer ISST
Philipp Hagenhoff
Anna-Maria Schleimer
2
3
Content
Authors ................................................................ 2
1. Introduction: Why Open Source? . ...................................... 4-5
2. Terms and Denitions: Open Source Software . ............................. 6
3. Approaches on How to Get involved with Open Source Software . ............ 7
3.1. Open Source Software Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2. Open Source Software Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3. Open Source Software Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Strategic Goals of Open-Source Usage, Contribution, and Provision ....... 10-11
4.1. Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-15
4.2. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-21
4.3. Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-23
5. Open-S ource Business Model ........................................ 24-27
6.Practical Check-List for Open Source Software within Companies . ......... 28-31
Let’s get started: Together! . .............................................. 32
Publication bibliography ................................................. 33
4
In today’s digital economy, open-source software (hereafter
OSS) plays an essential part. More than 90 % of the current
software solutions are linked to open-source solutions by
embedding, supplementing, or transforming them (Harutyu-
nyan 2020). Thus, OSS has become a central building block
of technological progress and is crucial for innovative and
digital business models. In the platform industry, OSS is used
to promote openness and to fuel the development of large
ecosystems. Therefore, OSS can act as an enabler for far-rea-
ching network effects and fuel participation from outside. Key
technologies, such as cloud computing, articial intelligence,
and the Internet of Things (hereafter IoT) are also built on OSS.
Clouds use open-source containerization technologies such as
Kubernetes and Docker, monitoring tools such as Grafana and
Instana, event brokers such as Kafka, and many other tools
that enable building robust IT. But also in the consumer indus-
try, open-source applications, such as Mozilla Firefox, Open-
Ofce, or LibreOfce are widely used (Schmidt et al. 2022).
Current surveys from research and industry show the increa-
sing importance of OSS outside the digital industry to drive
digitalization in traditional industries, such as the logistics
or manufacturing sector (Blind et al. 2021; Gentermann and
Termer 2019). More than 60 million contributors on GitHub, a
platform for managing software development projects, under-
line the increasing importance of OSS. The popularity of OSS
can be explained by the accompanying potentials that come
along with the concept: OSS can act as a driver for setting new
standards as it fuels the software’s diffusion. It also increases
the development efciency as the modularity of OSS eases the
reuse of source code for other development projects. The open
development process enables the participation of external
developers so that the software quality increases by external
peer review and innovative ideas from outside can be incorpo-
rated into the OSS. Companies from traditional industries, such
as SMEs, can use open source as strategic tool to increase their
attractiveness to IT personnel and to enable cross-company
collaboration. Thus, open source offers the possibility to gather
and combine IT resources efciently to address the ongoing
lack of (IT) labor force in traditional industries.
Even though the benets of open source have been recog-
nized by traditional companies, many of them are hesitant
to actively contribute or provide OSS due to the lack of an
adequate strategy and a lack of business model skills
(Gentermann and Termer 2019). Unlike traditional business
models, revenue cannot be generated directly from the actual
OSS as license fees do not apply to the software. Planning
an open-source business model is crucial as companies must
balance the optimal degree between openness and closed-
ness. For example, business-differentiating intellectual property
could be given away to competitors, if open sourcing essential
product parts. On the other hand, companies could lose the
advantage of open source by providing a mostly proprietary
offering or neglecting community building. Therefore, each
company needs to evaluate its resources and knowledge
before choosing a suitable business model.
Closely linked to the idea of business models is the overall stra-
tegy a company can pursue. Besides creating a specic open-
source business model, the usage, contribution, or provision of
OSS can have a tremendous strategic impact and benets for
companies along various dimensions. Especially highly compe-
titive but traditional industries such as logistics and engineering
can benet from OSS. Industries that are hallmarked by a scat-
tered nature of various processes, inconsistent standards, and
different customer requirements due to the individuality of the
products and processes can use OSS to allow easy integration
and connectivity of systems. Thereby they engage in a de-facto
standard setting which helps to harmonize processes and thus
creates benets for customers and service providers alike.
The underlying Whitepaper provides a practical overview for
companies that wish to build their open-source strategies
and summarizes the main strategic advantages of OSS along
with the three categories of “technology”, “organization”
and “environment”. In addition, the Whitepaper provides a
compact guideline regarding important key questions that
companies should consider when implementing open source in
the sense of using, contributing, or providing OSS.
1. Introduction:
Why Open Source?
Inspecic,theWhitepaperanswersthe
followingquestions:
What is OSS?
What is the difference between using open source,
contributing to open-source projects, and provi-
ding own open-source code?
Which strategic impact can usage, contribution,
and provision of OSS have from a technology,
organization, and environmental perspective?
What are open-source business models?
What are practical guidelines for using, contribu-
ting, and providing OSS?
© Adobe Stock, James Thew
5
6
2. Terms and Denitions:
Open-Source Software
Open Source refers to a type of software whose source code
is made publicly available and that can be modied and used
by external parties. The current understanding of open source
can be explained by similar concepts and its historical develop-
ment. The intermediate milestone in this process is, among
others, the establishment of the non-prot “Free Software
Foundation” by Richard Stallman in 1985 (Stallman 1999).
From the very beginning, the Free Software Foundation popu-
larized the basic idea of “Free Software” in which the user
should have the opportunity to use, study, modify, improve,
and distribute the software code. Until today, the free soft-
ware foundation aims to maintain open-source projects and to
support the resulting collective learning process as well as the
exchange of new knowledge (Free Software Foundation 2020).
As the term “Free Software” has often been misinterpreted
and associated with the term “free of charge”, the terminology
“Open Source” was introduced by the “Open Source Initiati-
ve” in February 1998 (Raymond and Perens 2018). The Open
Source Initiative’s main goal was to spread the open-source
code’s core concept and to clarify the misunderstandings
arising with the free software terminology (Rajala et al. 2006)
The Open Source Initiative denes ten characteristics of open
source that read as follows (Open Source Initiative 2007)
1. Free Redistribution: The license shall not restrict any
party from selling or giving away the software as a com-
ponent of an aggregate software distribution containing
programs from several different sources. The license shall
not require a royalty or other fee for such sale.
2. Source Code: The program must include source code,
and must allow distribution in source code as well as com-
piled form.
3. Derived Work: The license must allow modications and
derived works, and must permit to be distributed under
the same terms as the license of the original software.
4. Integrity of the Author’s Source Code: The license may
restrict source code from being distributed in modied
form unless the license explicitly guarantees such distri-
bution. The license must explicitly permit distribution of
software built from modied source code.
5. No Discrimination Against Persons or Groups: The
license must not discriminate against any person or group
of persons.
6. No Discrimination Against Fields of Endeavor: The
license must not restrict anyone from making use of the
program in a specic eld of endeavor. For example, it
may not restrict the program from being used in a busi-
ness, or from being used for genetic research.
7. Distribution of License: The rights attached to the pro-
gram must apply to all to whom the program is redistribu-
ted without the need for execution of an additional license
by those parties.
8. License Must Not Be Specic to aProduct: The rights
attached to the program must not depend on the pro-
gram‘s being part of a particular software distribution.
9. License Must not Restrict Other Software: The license
must not place restrictions on other software that is distri-
buted along with the licensed software.
10. License Must Be Technology-Neutral: No provision of
the license may be predicated on any individual technolo-
gy or style of interface.
The ten characteristics show that the open-source terminology
matches the main idea of free software by illustrating concepts
and benets of source code sharing and software collaboration
without hindering the commercial use of OSS as well (Fitzge-
rald 2006). There are three approaches on how to get involved
with open source: usage, contribution, and provision.
7
Companies can approach OSS in different ways. They can either
simply use OSS, they can actively contribute to OSS projects, or
they can provide their code and put it under an OSS license.
3.1 Open-Source Software Usage
The rst approach focuses on the (passive) usage of the OSS.
The user takes advantage of the software’s specic benets and
functions without actively involving much in the community.
The primary objective is the in-house usage, for example, to
improve internal processes and software. The selection of OSS
is similar to the one of proprietary software, as internal decision
criteria, such as technical capabilities, budget, and other restric-
tions are used to evaluate the potential software. In addition to
established decision criteria, companies should consider the OSS
community as they are the driving instance of the software. The
OSS is often perceived as a commodity service as it is, in contra-
ry to proprietary software, free of license fees. However, some
companies have professionalized the commercialization of OSS
by selling complementary products or services. Therefore, OSS
does not come “for free” if the user needs support or hosting
services to implement and use the OSS. The advantage of the
OSS usage approach is that users do not need profound IT skills
to benet from the OSS advantages, such as lower costs for
ready-to-use software, security, and reliability as the commu-
nity can provide security upgrades and patches. Therefore, this
approach is suitable for users new to the open-source topic as
they are similar to consumers without an active role in the com-
munity. On the other hand, the passive user has less inuence
on the OSS development process and its changes. This results
in accompanying risks as the community is not deadline-driven
and bugs may not be xed timely. Non-technical users may face
a high entry barrier as traditional OSS was developed by and for
developers (AlMarzouq et al. 2005). However commercial OSS
providers have adapted their product offering to non-technical
users.
OSS can be used in different ways. Generally, open-source
components can be:
Merged into other software components (Incorporation),
Connected with other software components (Linking),
Modied (Modication) or
Transformed (Translation)
Incorporation refers to the possibility of integrating parts of OSS
into the company’s software. This includes, for example, the
insertion or integration of source code into the own program
code. In the Linking, a developer
connects an open-source component with his own
component. This link can be static or dynamic
(static/dynamic linking). Also, by encapsulation (packaging),
a connection can be made. Modication of OSS components
involves adapting or changing the original source code of an
open-source component. This also includes the insertion and
removal of source code.
Such adaptations are made to optimize the components or
to remove errors. Finally, open-source components may be
converted (translated). This covers for example the translation
of code into other programming languages and the compiling
into a binary le. In the case of the various possibilities for OSS
usage, organizations need to comply with the respective license
obligations.
After Schmidt et al. (2022)
3. Approaches on How to Get involved
with Open-Source Software
8
Incorporation Linking
3.2 Open-Source Software Contribution
The second approach focuses not only on adopting the OSS
but also on involving into the community and the accompany-
ing benets. For example, companies that actively participate
can benet from a broader and richer knowledge transfer and
be part of development processes. The advantage over the
previous approach is that the company becomes part of the
community and can potentially exert some inuence on the
community by giving suggestions on future software impro-
vements or key features. Thus, they can use the community as
external resources to customize the software to internal needs.
Instead of autonomous in-house production, the communi-
ty becomes part of the development processes. In addition,
companies that share their software code can benet from the
community’s feedback and external developer resources. The
approach is best suited for companies that have the resources
and abilities, e.g., knowledge of technical development or
license agreements, to participate in the community. In addi-
tion, the company needs to consider the higher time effort
that comes with active community involvement (AlMarzouq et
al. 2005).
Contribution thereby means, that companies actively con-
tribute source code to existing projects. Ideally, the projects
have a direct impact and benet for the company. Software
developers are communicating with other developers and
contributors within the projects and engage in a joint co-deve-
loping process. Those projects are mostly publicly available on
platforms such as GitHub.
Prominent projects are often sponsored and supported by OSS
foundations such as the Linux Foundation or the Apache
Foundation. Sometimes also big companies such as Google or
Microsoft do not only publish their projects but also support
individual projects if they can benet from the current
developments.
After Forschungsbeirat der Plattform Industrie 4.0/acatech (2022)
9
Translation
Modication
3.3 Open-Source Software Provision
The last approach describes the active provision of OSS by ini-
tiating its own open-source projects. The company can choose
to either release OSS or initiate a community to develop a new
solution. As an initiating instance, the company can control
the license under which the source code is released, which
inuences the further direction of the open-source project as
copyleft licenses are more restrictive than permissive ones but
guarantee derivate OSS (AlMarzouq et al. 2005). In addition to
the other potentials, providing OSS can spur network effects,
such as in the platform economy, create new business models,
enable open innovation, and accelerate the diffusion of new
technology (West 2003; Okoli and Nguyen 2015). As the con-
tributors of open-source communities tend to be customers at
the same time, the company can tighten its customer relation-
ships and leverage the customer as a resource through this
approach (Hippel and Krogh 2003). However, companies need
to be aware that the benets of this approach will only unfold
over a longer period as it takes time to grow a healthy and
sustainable community. Therefore, companies need to actively
develop and support their community to increase its attractive-
ness to external developers (AlMarzouq et al. 2005).
Furthermore, companies need to consider carefully, which pro-
duct part they want to provide open source and how to gene-
rate revenue to avoid exploitation from outside. In the case of
Elastic, the company had to relicense its open-source search
engine after an opponent had launched its version based on
Elastic’s OSS (Banon 2021). Lastly, large companies that want
to follow the provision approach should consider involving
lawyers to help them choose the best open-source license to
t their requirements and objectives (AlMarzouq et al. 2005).
Due to its complexity, the method is suitable for companies
that are familiar with the previously mentioned open-source
approaches and that want to improve their competitive posi-
tion through network effects or for companies that want to
enable open innovation (AlMarzouq et al. 2005).
Companies deciding that open-source provision is a benecial
business model or should be part of their business strategy
can provide their open-source platforms and development
environments. However, it is most benecial to use existing
and well-established platforms such as GitHub or GitLab. At
the same time,
it can also be benecial to incorporate and “donate” the
project to an existing foundation that takes care of community
and governance processes. In the end, this is up to the respec-
tive company and the goals that should be fullled.
After Forschungsbeirat der Plattform Industrie 4.0/acatech (2022)
Adding Injecting
Deleting
Fixing
Optimizing
Changing
10
© Adobe Stock, Melisa
11
Companies that decide to either use, contribute, or provide
OSS mostly do so, because they pursue different strategic
goals within their company and respective enterprise net-
works. Thereby the strategic impacts differ between usage,
contribution, or own provision. Providing own source code
under an OSS license has the most far-reaching impact on a
company and helps pursuing mostly ecosystems and market-
related strategic goals. However, the contribution and usage of
OSS also support various strategic decisions within a company
and does not only allow for cost savings but also the co-crea-
tion of important software developments.
In the following the different impacts of using, contributing,
or providing OSS are elaborated among the three dimen-
sions of “technology”, “organization” and “environment”
following the technology diffusion model by (Tornatzky and
Fleischer 1990). These strategic insights are retrieved from a
joint project between Fraunhofer IML, Fraunhofer ISST, and DB
Schenker and are shared in the spirit of open source with the
interested community. The main advantages and benets of
OSS are summarized in Table 1.
The detailed strategic impact of the various advantages for a
company is explained in the following sub-sections.
Table 1: Main strategic advantages of OSS
4. Strategic Goals of
Open-Source Usage,
Contribution, and Provision
Technology
Quality Interoperability
Security
Code Quality
Stability and Longevity
Flexibility
Independence
Organization
Human Resources Culture Business Development
New Human Resources
and Talent Attraction
Workow
Transparency
Open Innovation
Diversity
Reputation
New Business Models
Environment
Digital Ecosystems Market
Establishment of Digital Platforms and Ecosystems De-Facto Standards
12
© Adobe Stock, spainter_vf x
13
From a technological perspective, quality and inter-
operability are the main intentions to either use OSS
or contribute respectively provide OSS.
From a quality point of view, OSS is meant to be secure – in
the sense that code was developed openly and the developer
community could nd sources of error and openly address
these. The original provider of the source code can implement
these modications and ensure that the software is secure and
up to date. Therefore, regarding open-source projects with
a lively and active community, one can assume that the code
quality is high and generally in a good shape. Unlike proprieta-
ry software, that is eventually developed by just one company,
the community has insights and helps to secure the quality
of the code. Given a large and open community, OSS is also
meant to be quite stable. Dependencies from individual, pro-
prietary software companies are not an issue. Even though, the
original developer of the OSS code would no longer be active,
the community has the possibility to maintain and enhance
the code. Thus, the stability of the code can be assured. This
is especially relevant, e.g., in the context of machine or aircraft
maintenance respectively assets that are characterized by a
long lifetime and where maintenance and service providers
may change over the life cycle. Moreover, the modular and
transparent nature of OSS allows for high interoperability. The-
refore, most OSS components allow users, given the respec-
tive license compatibility, to be combined and integrated into
existing software applications exibly. OSS entails the great
potential for reducing incompatibilities of interfaces allowing
the easy and hands-on creation of new products and services.
These advantages can be used from a strategic perspective
concerning the three different engagement levels of usage,
contribution, or provisions as described in the following pages.
4.1 Technology
Technology
Quality Interoperability
Security
Code Quality
Stability and Longevity
Flexibility
Independence
14
Strategic impacts of usage, contribution, and provision
from atechnology perspective
Quality
Strategic goals
Security
Usage
As the open-source community is
checking and reviewing the source code
regulary, bugs or security vulnerabilities
can be quicker detected. Therefore,
using OSS could be a security-relevant
decision.
Contribution
By contributing to open-source projects,
the company is actively engaging in the
development of the respective software
and therefore contributes to its security.
From a strategic perspective, this can
be important if the company wants to
ensure the security of the software, as it
uses the software on its own. Therefore,
new developments and decisions can be
shaped by the company.
Provision
By actively providing own open-source
projects, companies can benet from
external developers that actively check
and alter the code and x eventual
shortcomings. Therefore, from a strate-
gic point of view, companies that do not
possess many internal developer resour-
cers could benet from the external
network and thus enhance the security
of their code.
Code Quality
Usage
Moreover, the usage of OSS allows
to observe the general code quality
in advance. Companies that wish to
understand the code quality and want
to make sure that the code quality is up
to their standard can benet from open
source compared to proprietary soft-
ware.
Contribution
The contribution to open-source projects
helps to establish and secure the general
code-quality of a certain projects and
can be seen as generally welfare-bene-
tting. Moreover, the company benets
from updated projects and sustains the
open-source community.
If few companies contributed, other
developers or contributors are less incli-
ned to be engaged in the community.
Provision
The same applies to code quality. The
contributions and knowledge of external
parties benets the code quality and
helps to develop the software and reach
a certain level of maturity. By providing
their own OSS companies can benet
from the external feedback.
Stability and Longevity
Usage
In case the software is needed for long-
maintenance assets, such as machines
with a long lifecycle, a company should
consider open-source projects to avoid
dependency on proprietary software
providers.
Contribution
By contributing to software that has
systemic relevance for the company’s
products, such as machines or long-
living assets, the company can reduce
dependencies on software companies
as they engage in the software develop-
ment process themselves and thus keep
“up-to-date”.
Provision
From a strategic point of view, it can
be benecial to provide code under
an open-source license if it becomes
clear that long-term service for clients
cannot be sustained or is not part of
the business model. If clients, e.g., have
machines with a lifespan of 30 years or
more, it may not be in the interest of
the software application company to
provide such long-term service due to
cost or personnel reasons. By providing
the respective code as open source, the
client can manage the code by him- or
herself.
15
Interoperability
Strategic goals
Flexibilty
Usage
If companies wish to build and provide
their software products for their customers,
the usage and integration of open-source
components can be a valuable strategy.
Combining different software elements
into a new product can be efcient and
cost-saving.
Contribution
Contribution to software projects can allow
for co-creation rights. Thus, companies can
actively shape the direction in which the
software project is heading towards. The-
reby companies eventually ensure an easy
integration into the other software projects
they are currently working on.
Provision
Providing own code under an open-source
license allows for easy integration of the
respective software into other systems of
customers and partners. Therefore, costly
alterations and time-consuming legal nego-
tiations and contracting can be avoided.
Moreover, customers may value the fact
that the software is open source and use it
more than proprietary alternatives - Thus a
competitive advantage may result for the
respective providing company.
© Adobe Stock, graphicINmotion
16
4.2 Organization
Besides technical aspects, OSS also provides various
benefits in the company‘s perspective as an organi-
zation. OSS has a beneficial influence on culture and
business development.
Companies that provide developers the possibility to engage in
open-source projects are more attractive than companies that
only develop proprietary. Software developers value open-
source developments as they cannot only gain reputation but
also share their work and benet from the positive aspects
described. Moreover, joint developments in open-source
communities may also allow for talent acquisition with respect
to the overall reputation of the company. Many developers
program software in their free time and if they happen to nd
out that the specic project they are contributing to is run by
a company with open positions, they may be inclined to apply.
Thus, from the perspective of a human resources department,
offering the possibility to develop software code under an
open-source license, can be viewed as a huge possibility for
talent recruiting but also ensures the satisfaction of employees
working in the eld of software development.
OSS may also contribute to the culture of the company in the
medium and long run. First of all, open source can be primarily
understood as a collaboration model. OSS code is developed
openly on platforms such as GitHub and entails certain quasi-
standardized processes and rules that govern the process of
software development. Thus, software developers that engage
in open-source projects may be used to a structured but open
and agile development process and therefore the overall work-
ow concerning communication and a common understanding
of “how to develop software in a team” can be enhanced by
OSS engagements. Along with a generally enhanced and more
efcient workow goes the aspect of transparency. As soft-
ware is publicly developed in the open-source context, deve-
lopers endeavor to provide high quality and contribute reliably
to the software product as peer developers can immediately
see their progress. This transparent process may ensure quality
and motivate developers to work on the project continuously.
Finally, the fact that source code is shared with a community of
potential customers and partners, can be understood as a form
of open innovation.
Within the concept of open innovation new products and
services are not developed internally but together with cus-
tomers respectively the relevant network (Chesbrough 2010).
Customers or partners are integrated early in the process and
thus can contribute not only knowledge but also their specic
needs and demands. Therefore, products designed in an open
innovation process may yield much higher acceptance rates in
the markets than products entirely developed internally. The
same applies to OSS: Projects that are developed under an
open-source license allow customers to be directly involved in
the development process and communicate their demands.
The same applies to important business partners: They could
immediately create application programming interfaces (APIs)
to ensure that the product matches with their complementary
products or services. Therefore, OSS enables open-innovation
processes and fosters an open mindset towards co-creational
processes.
In addition, from a business development perspective, OSS
can entail various benets. First of all, companies that engage
in open-source communities or projects and that support
them either by providing developers as a resource or dona-
ting money to respective open-source foundations can build
a reputation in the open-source and thus software and tech
community. Those companies show that they may not only use
OSS, which can be viewed as a donation from private deve-
lopers or other companies but also give back to the commu-
nity they benet from. Therefore, the aspect of reputation
and community engagement should not be underestimated.
However, of great importance from a business development
perspective are the possibilities to design various open-source
business models. Although companies do not generate a direct
revenue stream from OSS in the sense of licensing, they can
engage in different business models centered around open
source. Examples are for instance the provision of additional
services or dual licensing (see chapter 5). From a business
perspective, contribution and provision of open source are of
high relevance. However, by using OSS some aspects within
the organization can also be enhanced or supported.
Organization
Human Resources Culture Business Development
New Human Resources
and Talent Attraction
Workow
Transparency
Open Innovation
Diversity
Reputation
New Business Models
17
4.2 Organization
Resources
Strategic goals
New Human Resources
and Talent Attraction
Usage
Using OSS may be less resource intense in terms of develo-
pers and own IT specialists. Firms can use existing solutions
and alter them in their favor.
Contribution
If a company decides, to actively contribute OSS, this may
attract potential talents from the IT segment, as they nd
the option to contribute to open-source projects attractive.
Provision
The possibility to actively provide own OSS projects is quite
attractive for many developers. Thus, they may prefer an
employer who allows such freedoms over employers who
are hesitant.
© Adobe Stock, kentoh
Strategic impacts of usage,
contribution, and provision from an
organization perspective
18
Culture
Strategic goals
Workow
As open source can be viewed as a cooperation and colla-
boration model and most open-source platforms such as
GitHub dene certain workows, companies can benet
from new, agile but structured open-source development
processes contrary to existing static development modes.
This holds true for providing and contributing OSS. Howe-
ver, also using the OSS can be a rst step toward an open-
source culture and respective workows.
Transparency
Usage
The use of OSS increases transparency as users within the
company can easily assess where the software comes from,
what it includes and check the communities‘ developments
to stay updated.
Contribution
Developing and contributing OSS implies being transparent
not only about the workow but also about the individual
development steps. This transparency often results in higher
code quality and better communication between different
parties. The required transparency in a contribution process,
meaning that the public can see and judge what the com-
pany is contributing, enhances the general level of commit-
ment to “good” and high-quality contributions.
Provision
Providing own software projects under an OSS license auto-
matically increases transparency of the company’s projects,
interests and goals. Thus, open-source projects can fulll
an important signaling function. However, not only external
parties benet from open-source projects, but also internal
stakeholders such as colleagues from other branches in
other countries – as they gain insight into the projects of
colleagues and collaborate in an easy manner.
Strategic impacts of usage, contribution, and provision from aorganization perspective
© Adobe Stock, kentoh
19
Culture
Strategic goals
Open Innovation
Usage
Using OSS does not only have the advantage for the
company itself but also for the customers and partners that
could refer to the same solutions or systems. Consequently,
joint value-creation processes can be fostered.
Contribution
By contributing their code or by collaborating within the
framework of open-source projects, companies can benet
from opening their innovation- and software creation pro-
cesses by getting feedback on their ideas and actively giving
feedback to other projects eventually shaping and framing
new developments.
Provision
The provision of own open-source projects allows the ope-
ration beyond own, xed boundaries and fosters relation-
ships with partners, peers, or customers. Those open inno-
vation processes are especially vital if external knowledge
is required and companies have a joint interest in working
together. As provider of the code, the company can actively
manage the open-innovation process.
Strategic impacts of usage, contribution, and provision from aorganization perspective
Diversity
Usage
Depending on the ecosystem and the specic software
type, the company can ensure that it uses a software that is
driven and accepted by a diverse and open community.
Contribution
OSS is not subject to borders, time zones or nationalities.
Thus, developers from all over the world can contribute to
open-source projects. Different backgrounds - may it be
educational backgrounds or simply nationalities of develo-
pers - can be benecial for projects as the diversity of the
developers lead to higher acceptance rates and diffusion of
the project.
Provision
By providing open-source code, developers from all over
the world can be attracted to work on the project. This
can be vital for international companies that need different
perspectives.
20
Business
Strategic goals
Reputation
Usage
The use of OSS can be an important signal to internal
developers but also to other stakeholders as the company
supports the idea of OSS and its incoming benets. Thus,
the company‘s internal reputation is increased by allowing
employees to use OSS.
Contribution, Provision
From a business perspective, companies can enhance their
reputation in the developer community if they actively pro-
vide their projects or support and contribute to open-source
projects. This creates a positive image for the company.
(New) Business Models
Usage
The use of OSS can be seen as part of the value creation
process, as OSS saves costs and increases efciency.
Partners may use OSS products which makes the usage of
the same product attractive in order to increase interopera-
bility, for example.
Contribution, Provision
Although OSS itself does not generate a direct income
stream, companies can build vital and sustainable business
models around OSS (see chapter 5).
21
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22
4.3.
4.3. Environment
In a complex and digitalized economy, companies do not
only operate within their boundaries meaning a xed set of
partners and suppliers rather than companies operate in digital
ecosystems and networks. OSS can play an essential role in
building and sustaining those ecosystems and networks. Like-
wise, open source can also have benecial impacts on markets
by allowing and supporting de-facto standardization. Big,
multinational platform enterprises, such as Alphabet (Google)
or Amazon have demonstrated how they can build large eco-
systems benetting from strong network effects by using open
source. The best example to illustrate this is Alphabet respec-
tively Google: By providing an open-source mobile operating
system (Android) the company was able to become the domi-
nant operating system provider for mobile phones.
Although Android can be used without any license costs,
some of the apps such as Google Chrome are pre-installed
and cannot be deleted. At the same time, Google built a large
ecosystem via Google Play where app developers can provide
their applications based on various application programming
interfaces and software development kits provided by Google
respectively Android.
The idea of providing OSS in form of APIs allowing third-party
developers to connect to their ecosystems can also be found in
the B2B context – however, less distinct and with smaller and
more specialized communities. One example is the Bosch IoT
platform, providing open-source components allowing inter-
connectedness of sensors, devices, and gateways.
The open-source approach is helpful for building own ecosys-
tems and connecting various actors, machines,
information- and data streams via platforms (see more about
business models in chapter 5).
At the same time, by providing open-source infrastructures,
de-facto standards can be established. If all companies and
developers as well as users “agree” on using the same tools
and infrastructure a de-facto standard will emerge. Unlike a
de-jure standard, a de-facto standard is a practical implemen-
tation that has been established through the widely accepted
use and not through standardization committees. By providing
OSS, free and easily accessible solutions, companies can help
to build a de-facto-standard. The benets of such standards
are easy integration and thus the decline of costs and an
increase in efciency and interoperability amongst various,
different systems.
Environment
Digital Ecosystems Market
Establishment of Digital Platforms and Ecosystems De-Facto Standards
23
Digital Ecosystems
Strategic Goals
Establishment of Digital Platforms
and Ecosystems
Usage
By using OSS, companies do not directly build their eco-
systems and digital platforms. However, they can actively
decide which ecosystems they support by deploying the
respective software. The integration of the ecosystem’s,
software also helps to manifest the applications into the
daily practice and leads to a wider distribution.
Contribution
By contributing to OSS of certain ecosystems the respective
ecosystem can be actively shaped. Own contributions help
to improve the software and created trafc increases the
attractivity of the ecosystem‘s community.
Provision
By actively providing OSS either via its platform or within
foundations, companies cannot only build own communi-
ties around their software but can also pursue the business
model of digital platforms and ecosystems.
If companies provide e.g., software development kits or
APIs as an add-on to their software, other developers and
companies can use this software and build complementary
products and services.
De-facto Standards
Usage
Using certain OSS helps to enable and establish de-facto
standards. A de-facto standard lives on its wide application.
By deploying the respective software, companies strengthen
the standard and can help its distribution.
Contribution
The contribution of OSS to a project can lead to supporting
a de-facto standard. By improving the software and making
it more feasible or more adapted to the actual work envi-
ronment, the software can yield higher rates of acceptance
and thus a greater reach. A wide reach, high acceptance
rate, and thus high level of distribution helps to establish
a de-facto standard.
Provision
Companies that engage in standard setting as it brings a
benet for their industry can pursue this strategic goal by
publishing OSS. Thereby, they may ensure a rst-mover
advantage: If a company is the rst to release software
under an open-source license, it may eventually loose
certain income streams from licensing but can ensure a high
adoption rate of the “free” solution. Thus, the company can
benet indirectly from the wide adoption of the solution
resulting in a de-facto standard when complementary or
coupled products depend on this “new” standard.
Strategic impacts of usage, contribution,
and provision from aenvironmental perspective
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24
From a strategic point of view open-source business
models can play a vital part in the company’s busi-
ness portfolio. The frequently occurring view of open
source is often characterized by the misunderstanding
that OSS cannot be commercialized. Practitioners new
to the open-source business often see the concept as
a collaboration tool or as means of reducing costs,
without considering its potential for new business
models. Well-known business model patterns include
dual licensing, open core, professional services,
subscription, open APIs and widget frosting.
Dual Licensing: The dual-licensing business model relies
on multiple licenses: the software is licensed under both an
open-source license and a proprietary license. The business
model often uses a copyleft license to avoid the commer-
cialization of their OSS. Besides, a commercial version of
the product is offered under proprietary license to generate
revenue. Well-known solutions that follow the principle of
dual licensing are, for example, MySQL or Asterisk. It is also
possible to provide core functions and basic applications
as open source and to place special extensions or features
under a proprietary license, which describes the following
business model.
Open Core: Open core is a business model in which the
core software is provided free of charge. Proprietary licenses
for advanced features, which make up a smaller percentage,
are sold by the company that owns the software. Similar
to the dual licensing, this business model is sometimes
criticized as some providers design the OSS offering in such
a way that it is hardly usable without a proprietary offering.
Regarding the proprietary code, there is no community to
add value as they cannot contribute to the code.
Professional Services: In addition to dual licensing, com-
panies can provide services related to the OSS. Common
service models include support, maintenance, and hosting
of software, as well as custom development and custo-
mization, consulting, and training. This business model is
used, for example, by RedHat which is a professional service
(e.g., support, consulting, and training) provider for OSS. In
addition, Red Hat offers further OSS solutions and products
based on OSS, for example in the area of cloud computing
or operating systems. Furthermore, business models can be
built around the OSS: Collaborative projects or intermedia-
ries can bring together different actors, similar to a plat-
form, to create value.
Subscription: Red Hat also offers the common open-
source business model of subscription. In this business
model, certain services, for example support or mainte-
nance of the software, are linked to a certain period of
time. As the free availability of the software in results in no
dependency on manufacturers (vendor lock-in), open-source
subscription models must be primarily characterized by the
quality of the service. Red Hat‘s corporate success is built
on community-driven open-source development. Therefore,
the company must also have active community manage-
ment: As a sponsor of the Fedora project, Red Hat supports
the open-source community in the further development of
the Linux distribution, based on the free package manage-
ment system originally developed by Red Hat. In this way,
Red Hat returns a portion of the revenue it generates based
on community-driven open-source development to the
community in question and ensures the continuation of its
development base.
5. Open-Source Business Model
25
Open APIs: In addition to provide business models based
on OSS, companies can choose to provide software
development kits or APIs as OSS. The open boundary
resources are used as strategic tool for realizing overarching
goals, such as indirect network effects. Especially, large B2C
or B2B platforms use open boundary resources to integrate
complementary products or services into their platform
ecosystem.
Widget Frosting: Lucrative business models can also be
realized regarding the compability of hardware and soft-
ware. For example, the software can be licensed under an
open-source license, however, the corresponding hardware
must be purchased, or vice versa. The approach is known
as widget frosting and a popular approach in the printer
industry: The printer’s driver is often made open source as
the core business is based on the physical product. In this
way, the user can customize and maintain the software,
which reduces the effort of the company.
In general, OSS has an accompanying function that supports
the business model. The OSS is not necessarily market-diffe-
rentiating and does not affect the company’s core intellectual
property. Instead, the OSS is an accompanying or complemen-
tary service to the core business and rather used to achieve
strategic goals. The company’s actual core business is, for
example, consulting, mechanical engineering, the operation
of a digital platform, or the design of individual software
applications.
Therefore, the development and provision of OSS are less
altruistic as a rst glance might suggest as companies follow
strategic and commercial interests. It becomes clear that OSS
provides the basis for successful and sustainable business mo-
dels. However, commercial interests do not contradict
open-source principles as the provided OSS can be a valuable
tool for users and companies could have a strategic interest in
thriving open-source communities and projects. Companies
such as Microsoft and Google therefore explicitly promote
various open-source communities with nancial, but also with
human resources. Blind et al. (2021) note that in a sample of
1,151 European companies from 14 different industries, com-
panies from the IT sector are the main force in driving open-
source projects as they actively contribute to OSS development
on GitHub with a share of 77 percent, followed by research
institutions and public institutions with 7 percent. Companies
from the mechanical engineering sector actively contribute to
open-source development with only 1 percent. The smaller
companies in particular invest a relatively large amount of re-
sources in OSS development. With a share of 88 percent, SMEs
are the main contributors to open-source projects.
26
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27
Dual Licensing / Open Core
Description Advantages Disadvantages Examples
Companies that provide
a freely available basic
offering (open source) and
proprietary complements
Better marketing
Attraction of
new customers
Achievement of high
margins
Product complexity
Consideration of legal
aspects (licenses etc.)
Elastic, Conuent, MySQL
Professional Services
Description Advantages Disadvantages Examples
Companies that generate
revenue through professio-
nal services
(e.g. development, consul-
ting, support, etc.)
Low investment costs
Attractive in consulting-
intensive industries
Low utilization of
the service
Low protability
Commodity service in
professional OS business
models.
RedHat, Hortonworks
Subscription
Description Advantages Disadvantages Examples
Companies that provide
a time-limited product
offering.
Better calculation of
demand
Achievement of high
margins
Consideration of legal
aspects
Less acceptance in
OS community
MongoDB
Open APIs
Description Advantages Disadvantages Examples
Companies that provide
open-source boundary
resources to their proprie-
tary offering.
No risk of losing intellectu-
al property
Easier for beginners to
enter the open-source
business
Primarily proprietary
business models
Facebook, Apple
Widget Frosting
Description Advantages Disadvantages Examples
Companies that sell
complementary physical
products, such as printers,
hardware, or machines.
Suitable for industry
Increased customer
satisfaction through
customization
Offered software is not
one of the company‘s core
competencies
No direct increased
prot margin by opening
software
Mercedes-Benz,
Smart-Things, Clover
Table 2: Open-Source Business Models
28
After a company has assessed and evaluated whether open-source usage, contribution, or provision is an inte-
resting and beneficial option from a strategic point of view, it should design an open-source strategy. Thereby,
it makes sense to establish an Open Source Program Office (OSPO) – a division or group of people that acti-
vely deal with and manage open-source activities. For small companies and start-ups that do not have these
resources, at least one distinct person should be responsible for managing the activities within the company
– regardless if it is usage, contribution, or provision. Companies and developers that wish to use OSS should
thereby ask and answer the following questions:
Table 3: Checklist for OSS Usage after AlMarzouq et al. (2005) and own additions
Community
Questions Indicator for Usage
What is the size of the community and how do the growth
trends look like?
Big or growing community: A large community serves as
indicator for active product development and thus increa-
sed product quality.
Are the users actively participating in the community? Signicant portions of the community are active partici-
pants. A high participation rate indicates a high software
quality and active support from members.
Who are the core players of the community? The objectives of the core players should not be contrary to
the organization’s own goals.
License & Legal Issues
Question Indicator for Usage
Can we accept the restrictions set up by the license? The licensing terms should be carefully reviewed before use
of the software in a commercial context.
Development Process & Organization
Question Indicator for Usage
Do we have sufcient technical capabilities to use or custo-
mize the software?
As part of evaluation, the technical capabilities, such as
hardware or IT personnel, that are necessary to operate the
OSS should be considered.
Software & Technology
Question Indicator for Usage
Is the software up to date and does it meet our technologi-
cal and safety requirements?
It is important to assess whether the OSS is frequently
updated, active commits are made and security updates are
available.
6. Practical Check-List for Open-Source
Software within Companies
29
Companies and developers that want to actively contribute OSS in form of own code should ask following
questions in addition:
Community
Questions Indicator for Contribution
Does the community possess broad knowledge and
ex pe rtise?
The community is effective in using the knowledge of its
members and solving problems that arise.
Does the community have a clear structure and rules of
organization and even a code of conduct?
The community is well organized, and the development
teams are organized in a modular way. Communication is
fast and professional.
Who is part of the community and do the active com-
mitters or sponsors align with our company‘s goals and
objectives?
The community is diverse but driven by a common spirit
and vision that is in line with the own vision and goals.
Table 4: Checklist for OSS Contribution after AlMarzouq et al. (2005) and own additions
License & Legal Issues
Questions Indicator for Contribution
Do we contribute only own intellectual property or do we
violate other licenses or patents by publishing our results?
The contributions are based on own intellectual property
and it is clearly indicated whose intellectual property it is
and that no other property rights are violated.
Do we agree with the license and the conditions under
which the project and the code is published? Do we agree
with the terms and conditions of a contributor license
agreement?
The terms and conditions of the license are in line with the
company’s policy and no negative side effects can occur
from contribution. The contributor license agreement is
clearly understood and accepted.
Development Process & Organization
Question Indicator for Contribution
Do we have to change the development process,
organizational structure, or routines to participate?
The current organizational structure promotes the parti-
cipation of our employees in open-source projects. Our
employees are acquainted with open-source development.
If not, a change in structure can be managed and teams
or persons that are liable for setting up a new open-source
process can be trained.
Software & Technology
Questions Indicator for Contribution
Is the software design modular? A modular software design facilitates a decentralized
development process.
Does the software meet the rm’s quality and security
standards?
The software project that is contributed to, is in line with
the company’s quality standards.
Can we meet the quality standards and level
of the community?
The company can adhere to the quality and safety standard
and ensure the required level of development of the
open-source project.
30
Companies and developers that want to actively contribute OSS in form of their code should however in
addition ask at least the following questions:
Community
Questions Indicator for Provision
Are we able to motivate people to participate in
the community?
The software stimulates the interest of programmers, or
the participation of customers is expected.
Can we afford the time and effort to initiate the communi-
ty and to participate?
The values and ideals of open source are part of our
culture. Therefore, we know how to promote participation
in the community.
Table 5: Checklist for OSS Provision after AlMarzouq et al. (2005) and own additions
License & Legal Issues
Questions Indicator for Provision
Can we establish appropriate licenses and contributor licen-
se agreements and its accompanying implications to ensure
our benet?
The company is aware of the implications that come with
copyleft or permissive licenses as well as
dual-licensing strategies.
Are we aware of own patents or other valueable intellec-
tual core property that we could undermine and well as
patents and intellectual property of others?
No intellectual property is violated. Likewise, the contribu-
tions and the intellectual property of employees is clearly
regulated
Are our provisions and contributions that build on other
software projects compatible with the license?
All software components that are part of the open-source
project are compatible with respect to their licenses.
Development Process & Organization
Questions Indicator for Provision
Do we have sufcient technical capabilities (hardware
systems, knowledge, and skills) to initiate an open-source
proce ss?
Capabilities to contribute to the initiation and development
are sufcient.
Do we have to change our organizational structure or
routines to participate?
The current organizational structure promotes the par-
ticipation of employees in open-source projects. The
employees are acquainted with open-source development
methodologies.
Is the open-source provision in line with the company’s
strategy? Are all important divisions involved and is broad
consensus and commitment given?
The open-source strategy has been clearly communicated
and assessed with respect to its overall t to the company’s
goals.
31
Table 5 (continued)
Software & Technology
Questions Indicator for Provision
Are we clear on why we want to release our software as
OSS?
Yes, e.g., we would like to increase our competitiveness or
enable open innovation.
Is the software that we provide up-to-date? Is the quality
assured and are all safety concerns accounted for?
Only high-quality, up-to-date products are published and
no safety issues arise for the company. Other users cannot
harm the company on the basis of the software neither can
the software harm other users due to misfunctions or lack
of quality.
Will the release of the source code impact our competitive
ad vantage?
The released software or the parts that are to be released
are commoditized.
Does our software design allow open-source development? Software has a good modular design so that decentralized
development processes, further expansion and growth is
possible.
Do we engage in a technology eld that brings us benets
with respect to knowledge inows,
business models or sustainability?
The technological perspective has been aligned with the
strategic perspective on open source. It does make sense
from both perspectives to publish open-source code.
© Adobe Stock, Maximusdn
32
The underlying Whitepaper has provided a first
stepping stone for developing open-source strategies
by showing important strategic aspects along the
dimensions of technology, organization, and environ-
ment. However, every good strategy-building process
is followed by implementation. Especially small and
medium-sized companies or companies that are “new”
in the open-source community may need support or a
sparring partner helping to specify the next steps.
Research Institutes such as the Fraunhofer IML and Fraunhofer
ISST, but also the TU Dortmund can be vital partners not only
for developing but also for implementing open-source strate-
gies. Together with big companies but also small and medi-
um-sized companies and start-ups we, the Fraunhofer IML,
Fraunhofer ISST, and TU Dortmund, want to build a strong,
vibrant open-source community around logistics, supply chain
management, and Industry 4.0 applications. We started this
undertaking by building the “Silicon Economy”.
The Silicon Economy is not only a publicly funded project but
our mutual vision: We aim to build OSS components together
with a user community coming from various industry sectors
and elds of applications. The purpose of joint open-source
development is to identify and realize commodity components
that can ease processes through a de-facto standardization.
At the same time, companies can join forces to build new and
innovative components for their specic business process and
integrate e. g. blockchain modules that are provided through
the publicly funded partner project Blockchain Europe.
In order to create a space for this joint OSS development, the
exchange of ideas and the identication of benecial commo-
dity applications, the Open Logistics Foundation was brought
into being. The Open Logistics Foundation supports a Euro-
pean-driven, open-source community focusing on logistical
applications. The associated Open Logistics e. V. invites all com-
panies that are interested, to participate in this open-source
community. At the same time, Fraunhofer IML and it’s partners
support individual companies in their intention to develop open
source – either from a strategy, business model- or technology
perspective.
More information about our open-source projects and initiati-
ves in Dortmund can be found under:
https://www.openlogisticsfoundation.org/
https://www.silicon-economy.com/
https://blockchain-europe.nrw/
Let’s get started:
Together!
© Adobe Stock, Melisa
33
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